The
Internal Revenue Service (IRS) has issued a notice of public hearing about
proposed regulations relating to the administration of a multiemployer plan participant
vote on an approved suspension of benefits under the Multiemployer Pension
Reform Act (MPRA).
The
terms of MPRA extended earlier guidance created under the Pension Protection
Act (PPA), to allow plans critical or declining status to avoid insolvency by
reasonably cutting benefits, including those already in pay status. A critical
part of the benefits reduction process involves an approval vote, by simple
majority, from the plan population. After first requiring approval from the
Department of Labor, the Pension Benefit Guaranty Corporation (PBGC) and the
Department of the Treasury, benefit suspensions will only go into effect if a
majority of all participants vote to approve them.
The
IRS published temporary regulations and proposed final regulations about the participant
voting process in early September.
A
month later, the Teamsters Central States, Southeast and Southwest Areas
Pension Fund announced a “Rescue Plan” to members that includes a request to
the Department of the Treasury to allow benefit reductions.
During
an industry conference in October, J. Mark Iwry, senior adviser to the
secretary and deputy assistant secretary for retirement and health policy at
the U.S. Department of Treasury, said the idea behind the suspension of
benefits provision in MPRA is that employees would get more benefits if the
amount were reduced than they would if the multiemployer plan becomes insolvent
and cannot pay any benefits.
The public hearing is
being held Friday, December 18, at 10 a.m. The IRS must receive outlines of the
topics to be discussed at the public hearing by Monday, November 30. More information
is here.
EBRI Research Backs Up Pivotal Role of Health Insurance
The Employee Benefit Research Institute has been conducting
“value of benefits” surveys for 20 years to determine the relative importance of
different benefits to workers—with one consistent winner.
Not a big surprise, but health insurance plans have consistently
topped the list of workers’ most precious employer-sponsored benefits in the
last two decades, according to the Employee Benefit Research Institute (EBRI),
even outpacing favorability of tax-qualified retirement plans.
A new report from EBRI, “Views on the Value of Voluntary
Workplace Benefits: Findings from the 2015 Health and Voluntary Workplace
Benefits Survey,” penned by EBRI researcher Paul Fronstin and Ruth Helman at
Greenwald & Associates, reviews decades of benefits usage data and assesses
what the future might have in store. The research shows “consistency in the
value of some benefits and substantial change in the value of others,” EBRI
says.
For example, between 1999 and 2015, the percentage of workers
ranking health insurance as the first- or second-most important benefit varied only
slightly, between 74% and 82%. This while the ranking of availability of retirement
savings plans fell substantially from 2001 to 2015. EBRI’s numbers show retirement plans were the first- or second-most important benefit for nearly
seven in 10 employees in 2001, while just 36% say the same thing today.
EBRI believes part of the effect may be due to the introduction
of additional benefits in its surveys during that time, such as paid time off, but it also
highlights the increased pressure many workers face from rising health care
costs—not to mention the lingering effects of the financial crisis and the
damage it did to many wage earners. EBRI finds three-quarters of workers
state that the benefits package an employer offers prospective workers is
extremely (36%) or very (41%) important in their decision to accept or reject a
job.
Currently, about 30% of employees say they are “only somewhat
satisfied” with the benefits offered by their employer, while 20% are not
satisfied at all. Looking beyond comparison rankings to the individual benefit
offerings employers may offer, fully 88% of workers report that
employment-based health insurance “is extremely or very important,” far more
than for any other workplace benefit.
NEXT: Employees want
lower costs, more choice
EBRI finds the availability of health insurance through an
employer is considered so important “that six in 10 report they are planning to
work longer than they would like in order to continue receiving health
insurance through their employer.”
In this group the plurality (44%) responded with comments
regarding the general importance of having health insurance for financial security, while
another 36% suggested they would “be unable to purchase it on their own due to
its cost.” Other reasons EBRI frequently heard mentioned include the desirable quality
of the employer’s plan (28%), inadequacy of Medicare for the individuals’ needs
(20%), and dissatisfaction with non-employment-based options for health
insurance (13%).
EBRI says a retirement savings plan, rated extremely or very
important by 75% of workers, and dental or vision insurance (70%) are also among
the highest-rated benefits when viewed individually. Smaller but still sizable
groups cite as extremely or very important a traditional pension or defined
benefit plan (50%), disability insurance (47%), life insurance (46%), and post-retirement
health insurance (41%).
Looking across benefits packages, workers consistently identify
lower cost (compared with purchasing benefits on their own) and greater choice as
strong advantages of employment-based benefits. “However, they are split with
respect to their comfort in having their employer choose their benefits
providers, and think the possibility that they may have to pay the full cost of
any voluntary benefits is a disadvantage,” the report explains.
NEXT: Overview of the
current landscape
EBRI finds benefits coverage in the workplace, including
health insurance, is far from universal.
“Eight in 10 workers report their employer offers them
health insurance,” the report notes, while 70% each indicate they are offered
dental insurance and a retirement savings plan. Vision insurance and life
insurance are offered to two-thirds each, and approximately one-half report
their employer offers them short-term disability insurance, long-term
disability insurance, a health savings account (HSA) and accidental death and
dismemberment insurance.
Just a third are still offered a traditional pension or
defined benefit plan, EBRI says.
“Fewer report being offered supplemental health insurance
for workers (25%) or other non-core, ancillary benefits,” EBRI says. “Further,
not all workers offered a benefit at the workplace take advantage of it.”
For example only about 85% and 82% of those who could
purchase health insurance or retirement investments at work do so, respectively.
About the same take-up rate is identified for dental and vision insurance,
while fewer, about two-thirds, choose to pay into a defined benefit plan when
given the option.
View the full report on EBRI’s website by clicking here.